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Archive for Mortgage Rate Articles

Needless to say my phone has been ringing off the hook from friends and past clients wondering what to do as home mortgage rates begin to climb. Over the last few years, American consumers have grown accustomed to interest rates breaking records with the lowest interest of a generation. Unfortunately, the reality is the at some point mortgage rates won’t recover and the trend of rising rates will be set in motion, if it hasn’t already.

What Causes Mortgage Rates to Fall?

Bond Market: When the bond market gets battered in most cases home loan rates will rise. Specifically, when the 10-year bond worsens usually the pricing on the 30-year mortgage rates worsens as well. Home loan refinancing becomes more active when the bond market improves.

Economy: Typically bad news in the U.S economy is good news for the mortgage market. When the unemployment ticks up, rates often tick down. When the GDP comes in lower than expected, rates on home loans may decline as well.

Federal Reserve: When the Fed commits to increasing the purchasing of mortgage bonds then rates tend to improve. When the Federal Reserve instructs Congress to bail out Fannie Mae and Freddie Mac then the mortgage market rallies favorably. When the U.S government pushes quantitative easing, ie. QE3, the bond market reacts and home loan rates drop to the benefits of consumers.

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Dec
11

Weekly Mortgage Rate Forecast

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This time of year rates typically don’t change much for most home purchase and mortgage refinance programs in the U.S. With that being said, it is an election year and the “fiscal cliff” does not help an already weak economy on the brink of another double-dip recession.

As we reported last week, the pricing worsened slightly for most home loan programs as the unemployment fell nationally. The weekly mortgage rates forecast looks to remain about the same. According to the Mortgage Marketing Guide, “the Bond markets have been pressed down today with positive economic news from Germany and as the Treasury is selling a significant amount of government notes and bonds this week.”

Look for pricing opportunities possibly on Wednesday as the Federal Reserve members meet for the last Federal Open Market Committee meeting of the year. The Fed will release their monetary policy statement at 12:30 pm ET on Wednesday, so this could move interest rates.

In other financial news, Freddie Mac (FMCC) announced yesterday that  home purchase and refinance rates should remain near record lows through the first half of 2013. The Freddie Mac spokesman also mentioned that home loan rates could increase in the second half of 2013, but should remain below the four percent threshold.

We suggest, checking back with us later in this week for pricing changes and current mortgage rates that could prove to be more favorable for millions of American consumers looking to save money with record low interest rates.

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The poor economic news has contributed to falling interest rates on home mortgages once again. In most cases, when the unemployment rate rises, consumers benefit from improved pricing on purchase loans and refinancing. Several lenders in San Diego, Los Angeles and Orange County have indicated the mortgage rates for refinancing have decreased in the last few days. As reported by the Mortgage Bankers Association on Monday, home loan rates inched a bit up last week and loan application requests had fallen.

Certainly Hurricane Sandy has slowed down the volume as millions of borrowers on the East Coast have been without power. The next few weeks could prove to be very difficult for residents in New York, New Jersey and Pennsylvania. Fannie Mae (FNMA) and Freddie Mac (FMMC) announced expanded help with their disaster relief programs available for distressed homeowners that may have a mortgage owned by one of these government sponsored enterprises. The Home Affordable Refinance Program saw a substantial rise in applications from underwater homeowners last quarter with an 11% increase compared to the previous quarter. There are still millions of homeowners across the country who have been burdened with underwater mortgages that have prevented them from refinancing into a loan with record low rates. HARP refinance rates are available today at 3.5% with no points. The “No fee refinance” has become a popular choice with homeowners this year.

  • No Equity Refinancing Options
  • No Closing Cost Mortgage Programs
  • Low Down-Payments for First Time Home Buyers
  • Record Low Rates for VA, FHA and HARP

According to the Department of Housing and Urban Development applications for FHA loan programs were up last quarter almost 6%. Refinance application led the way for FHA, but HUD reported another surge in first time home buyer loans being submitted into process. The Federal Housing Administration indicated that the increased application volumes was mostly in response to low FHA rates and low down-payment requirements that have help renters become homeowners without breaking their bank.

Today’s rates on a fixed 30-year FHA mortgage were available at 3.25% (APR 3.25%) without any lender fees for loans up to $417,000. With home prices rising in regions like Arizona, California, Nevada, North Carolina and Virginia, many lenders are excited about the new lending opportunities in the year to come.

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Just when you though mortgage rates had hit the “rock-bottom”, the Federal Reserve makes a move that caused interest rates to fall to a new record low. In an effort to stimulate the economy and jump-start the ailing housing markets, the Fed announced a new plan centered on buying mortgage securities.

The Outlook for Record Low Mortgage Rates Has Been Extended by the Fed

St. Louis Federal Reserve President James Bullard down-played the effectiveness of the first two rounds in an interview recently. The Fed hopes that keeping pressure on short and long-term rates will have a positive effect on the economy. It’s no secret that lower interest rates could motivate businesses investment in the economy if borrowing is cheap and easy.

According to the SF Gate, the mortgage bond yields fell to a new ridiculous low. Mortgage News Daily reported better pricing and lower rates for buying and home mortgage refinancing. The gap with an average of 5 and 10-year Treasury rates dipped 16 basis points to 98 basis points which is the lowest recorded since 1992.

According to the latest Freddie Mac survey, the average interest rate for a thirty-year mortgage was 3.55% but the news about the Federal Reserve extending another stimulus with QE3 caused rates to tumble today.

The fifteen-year rates were lower by one basis point at 2.85%. The Freddie Mac report also revealed that average borrowers paid on 0.6 of a point for home mortgages on the 15 and 30-year terms. The 10-year rates and hybrid ARMs remained the same as the previous week but the emerging news from the Federal Reserve certainly could force rates lower in the coming week. We also anticipate that conforming and jumbo pricing may improve this week which cause another surge in refinance applications.

Check the today’s rates now:

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What are the advantages of 30-year mortgage rates? Many new home buyers like the lower starting interest rates available on adjustable rate mortgages. They see these hybrid ARMs as a big advantage, because the rates are fixed for a period of years before resetting to a variable interest rate. It allows them to qualify for a larger home. However, an ARM has distinct disadvantages when it comes to managing your personal finances and keeping your house payments under control.

Here are some of the advantages to consider with a fixed rate 30-year mortgage:

  1. The interest rate remains constant. If you fix your mortgage rates at the lowest fixed 30-year mortgage rates in decades, you will have the same rate for the life of the loan. That means you are not going to see a minor rate adjustment on an ARM loan make your payments outrageous.
  2. Payments remain constant. When interest rates start rising, it becomes difficult to refinance an adjustable rate mortgage.  Borrowers will start seeing, their mortgage rates start going up. Let’s look at an example. A mortgage of $300,000 with an initial mortgage rate of 4%, you will have a payment of $1,432.25 per month. If that rate goes up to 6.5%, the payment goes up to $1896.20. If the rate goes up to 9%, the payment goes up to $2,413.86. If you got a fixed rate 30-year mortgage at 6%, the payments would be $1798.65 with no chance of adjustment.
  3. Budgeting is easier. You have a fixed payment. You know that each month for the next 30 years. You will need to pay $X. As your income increases over time, that amount stays the same. You can use the extra income to save for retirement or to pay down the principal on your mortgage. The choice is completely up to you.
  4. A fixed rate 30-year mortgage allows you to weather rate changes with grace. One of the biggest problems in recent real estate troubles is the adjustable mortgage rates that started going up. A single percentage rate chance can make your payments jump quickly. With a 30-year mortgage refinance, that is never a concern. Your neighbors will sweat while you smile and shake your head.

These are a few of the advantages of a 30-year fixed rate mortgage refinancing. With that fixed payment amount, you will only need to adjust payments as your escrow changes. Your principal and interest will remain the same. You can pay the loan ahead with extra money you get. However, you will never have to scramble to make a mortgage payment that just jumped by a couple hundred dollars a month.

 

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Can home loan rates stay this low forever or is it just a matter of time before interest rates start creeping up? Did you know that fixed rate 30-year mortgages have averaged below 5% for 13th consecutive months?

If you have been considering financing a new home buy or doing a home refinance transaction, you might want to do it sooner than later. There are several reasons that most mortgage executives believe that home mortgage rates will rise in the months ahead.

  • When the Economy Rebounds the Federal Reserve is sure to begin Raising Rates
    Although the Obama administration claims that the economic recovery began the summer of 2009, many economists do not agree because unemployment has remained high. As soon at the unemployment rate begins to fall and corporate profit margins start to grow, you can expect the Fed to shift gears on keeping the interest rates low. .
  • When the Housing Market Rebounds
    As American consumers begin to do better financially, it raises the demand for housing. Likely this will drive house prices and mortgage rates higher. Many first time home buyers have really benefited from the low fixed FHA mortgage rates, but that can’t last forever.
  • Inflation Will Drive Interest Rates Upward
    With food and energy prices continue to rise, it will be difficult for the Federal Reserve to keep the rates this low for long. In addition, if this low rate trend continues much longer, mortgage lenders will need to protect their profit margins and be forced to hike mortgage rates.

The bottom line is that mortgage interest rates can’t stay this low much longer. Expect conventional and government lenders to begin raising rates for home buying and mortgage refinancing later this year or early 2012

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Jan
20

Timing the Lowest Mortgage Rates

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American consumers are notorious for wanting the best deal, so when borrowers tell you they are waiting to get the lowest mortgage rates we should not be surprised. With 30 year fixed rates falling below 4% last month, we may have found the bottom of the mortgage rate graph.  Since then, home loan rates have teetered back and forth, but all signals point towards a trend of rising rates in 2011 and beyond.  Of course if the economy continues to sputter you could expect low mortgage rates, but it is doubtful we will see the 30 year fixed rate mortgage below 4% anytime soon.  The fact remains that the lowest home loan interest rates can be attributed to the Federal Reserve and the U.S. Treasury buying the bad credit mortgage portfolios from banks and lenders even as the default rates were rising.

Will Mortgage Rates Get Lower?

A few mortgage lenders are offering the fixed 10 year mortgage in the 3.5% range, but how many Americans have the ability to afford the higher payment that comes with a ten year amortization schedule?  The 15-year fixed mortgage is a bit more realistic and great choice for those borrowers that can see retirement in the near future. Still with the writing on the wall, why are do so many Americans continue to wait for mortgage rates to get lower?

According to BofA’s, Jeff Moran, “A lot of people have been rejected from loan refinancing or home buying in the last few years, so many of these people may be a little tentative about facing the scrutiny of a mortgage lender.  Moran continued, “Many consumers were taken back by the tighter guidelines for home loans and many applicants simply do not meet the new requirements for refinance or home purchase loans.”

The bottom line is that waiting for rates to fall again is very risky.  When you look at a thirty year graph highlighting the trends of mortgage rates you can see that it is far more likely that rates will rise than they will fall.  Borrowers waiting on the sidelines for lower rates for home financing could be waiting for decades. Still many consumers appear to be just fine sitting on the sidelines, waiting for lower mortgage rates to appear.  Nobody knows for sure, but if you have the ability, I suggest locking into a mortgage that you are comfortable sooner rather than later.

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